Operational Scorecard: Understanding the Balanced Scorecard

An operational scorecard, also called the balanced scorecard (BSC), is a management system or management tool that helps track the performance of a team and the progress of an objective in an organization. This performance measurement system provides four different perspectives for measures of progress, including financial measures and customer satisfaction measures.

A manager or stakeholder can use an operational scorecard system to track and manage many projects or initiatives at once to ensure they are hitting the right metrics or strategic objectives for optimal strategic performance.

The first proposal for the balanced scorecard approach originated in a 1992 Harvard Business Review article titled “The Balanced Scorecard—Measures that Drive Performance,” written by Robert S. Kaplan and David P. Norton. In this article, Dr. David Norton and Dr. Robert Kaplan proposed that the scorecard could act as a strategy map that could consolidate a company’s agenda and operational metrics for improved strategic planning and performance management. The scorecard system became popular with the release of their book titled The Balanced Scorecard: Translating Strategy Into Action.

The four balanced scorecard perspectives that appear on most BSC templates help with strategic management and decision-making. You can use these perspectives as key performance indicators (KPIs) to track strategic goals and business performance, as well as to better understand your company’s internal processes and business strategy in the short term and long term to improve your bottom line, creating a culture of continuous improvement. Here are the four different perspectives:

1. 1. Customer perspective: This is the customer analysis perspective, which examines a company’s investment in customer relationships.
2. 2. Financial perspectives: This is the financial analysis or financial performance measure that relies on a company’s financial statements for analysis. This perspective looks at operating incomes, return on investment, profitability, cash flow, and sales backlog.
3. 3. Internal business perspective: This is the perspective on internal business processes, which tracks organizational performance from the beginning of a project to the end, such as developing, launching, and releasing a new product.
4. 4. Learning and growth perspective: This is also called the innovation and learning perspective, which measures the company’s information systems as well as employee satisfaction and rate of improvement.

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